salary negotiations

A Simplified, Three-Step Approach to Salary Negotiations

The most important part of salary negotiations ISN'T the actual face-to-face, back and forth part.

What’s important is the setup.  Nearly everyone thinks of a salary negotiation as that point in an offer process when you get to hammer out all the details, starting with salary, moving on to bonus and benefits and cars and cell phones and laptops, etc. That's actually the easiest part.  

The following is a negotiations strategy is based on three steps:

Step 1 - Setup: Avoiding the Issue/the Right Mindset

The setup is not only the most important part of a negotiation; it’s also the aspect so many people find uncomfortable. 

There is something about "making the ask" or pushing back that creates an urge to say yes to everything and just be done with it. Or there's a fear that if you don’t agree right away, the offer will be rescinded. (Whenever an offer is actually rescinded, which happens rarely, it's almost always a clear signal that something's wrong with the position and/or the organization.)  

It's important to go into any interview situation, including a phone screen, with a positive mindset  -- you feel like you've earned it, you have the background and skills, and you're qualified to not only get the offer, but also to be paid accordingly. You're prepared.   Going in with a sense of desperation or urgency (You’re finally ending the search!  You’ve hit your dream job!) will be counter-productive. 

Whenever the subject of money is brought up, at any point in an interviewing process, the negotiation has started. That could include a five-minute phone screen, even if you haven’t had a formal interview.

Here's the hard part mentioned earlier: You must try to avoid the subject of money for as long as you can. The longer you defer the better. The longer you defer, the more opportunity you have to build value. The longer you build value? The better total compensation you will be offered.

If you don't set up an optimal situation for making the best deal you can, then you could easily get stuck later on during reviews with those dreaded COLA raises or some other organizational limitation.  

There are many ways to avoid the topic. 

For example: "Money is very important to me, of course. But, if it's ok with you, could we defer this discussion until we figure out if there's a good fit?  I'd hate to knock myself out of contention because I'm coming in too high or too low early in our conversation. I'm confident we'd be able to work it out."

Or, if that doesn't work, how about, "Could you give me an idea of your range?" If the interviewer does respond with a range, and it's anywhere near where you think it should be, you just say there will be no problem working it out if you get to that point.  

Or, if you perceive the interviewer getting impatient, you say you'll be looking for an "all in" (including benefits, bonus, 401K match, everything) of __________. That, of course, is if you're looking to bump your total comp up significantly. If you're seeking to keep it lower for other reasons, then you say you'll be looking for a base of ____________, which is close to what you're currently earning, or maybe an average of the last four years’ bases. 

Or, if the interviewer is insistent, you'll have to give in and tell the real numbers. You cannot fabricate your history; it's easy to verify. All the interviewer has to do is ask you for a previous W-2.   

Even if you have to give in, you've at least set a precedent where the interviewer will know you're not going to be a pushover in any subsequent compensation discussions. That's creating a strong brand. 

This pushback, of course, will be continued in the actual face-to-face negotiations later on.  Collegial and friendly, but still a pushback.  

One note: Working with HR professionals or recruiters makes this much tougher. They're there to screen. It's why I encourage clients to do their best to get to decision makers, who will usually be far more amenable to the approach described here. 

Step 2 – Defer: Don’t Negotiate at the Point of Offer

You’re in no shape to begin a negotiation at the point of the offer.  No matter how well prepared you think you are, or how unemotional you may be in the interaction, your emotions of the moment will cause you to make mistakes, or forget critical questions.  You need time to develop a strategy. 

If the offer is low, say that you need some time to think it over, that you will have some questions about the position.  Then mention that the offer seems a bit low, from what you’ve determined in your market, but you still want some time to think it over.  On the other hand, you’re excited about the organization and think there’s a great fit; always make an employer know that you’re enthusiastic about the position.  No one wants to hire a candidate who doesn’t seem to want the job.  That way, you’ve planted the idea that there will be some discussion about comp.  And you’ll have time to plan a strategy.

If the offer is in the right range, same response – except for the part about the comp being low.  And the excitement is there, too. 

If the offer is great - again, same response.  You still might have other issues to clarify.  You could even mention that there won’t be a problem with the compensation, but you’d like to be sure about all aspects of the new job, and look forward to closing the deal the next time you meet.

Do NOT negotiate via email.  Tone is lost, and there will be problems.

If the offer is long distance, try to negotiate via Skype or Face Time.  You want to be able to read the other person as well as possible.  Phone is ok, but you prefer to actually see the other person. 

Step 3 – Negotiate: The Actual Face-to-Face Negotiation

We hope that it’s face-to-face, because that provides the advantage of checking visual cues. 

The balance of power has shifted once the offer is made.  They want you, not their second or third choice.  Keep that in mind.  They do not want to start over or settle for someone else, and want the job filled. 

If steps 1 and 2 have been followed, you’re in an excellent position to begin the negotiation.  First, before you start, decide what your “drop dead” numbers and situations are.  In other words, what’s your bottom all-in comp number?  Does the job match up well with your expectations – or not? Don’t go into the negotiation without thinking those issues out.  What is important to you?  Be prepared to discuss every loose end. 

Prepare a list, one that you can bring with you and place in front of you.  It’s your best opportunity to not only set up the perception about how you conduct business, but to make the “ask” for every item that’s important to you.

My favorite words in negotiations are “we” and “clarify.”  Never “I need.”  We talk about what’s going on in the market, rather than what we “want.” 

My suggestion is that the list of questions creates a “win-win” rather than “I won” or “they won.”  For example, don’t start with the most critical items.  Start with something easy like a job description question, addressing something that wasn’t clear during the interview process.  Ask about the 401K or 403B, if that hasn’t been described.  The #3 question should be your biggest issue. 

For some, that tough #3 issue is base salary.  For others, it’s bonus structure.  Or perhaps reporting relationships.   Or vacation. 

If your “#3” is base salary, most of the time the organization will have more money to offer; most hiring managers or HR professionals will start as low as they think they can get away with.  If the offer was low and/or you think you should be paid more for this position, discuss your research into what the market is for your level of experience, education, and expertise – and be prepared to discuss where that information came from, if pressed.  Sometimes, it comes from salary websites such as Glass Door or any of the many other surveys, sometimes from peers, sometimes from previous and ongoing interview situations.  They are all part of the research. 

Do not expect that the person offering the position will be prepared to immediately respond.  They may have to go back and discuss with others in the organization.  This is part of the process, so don’t be concerned that there’s not a quick decision. 

If the big issue is bonus, do not accept the word “discretionary” as a satisfactory response.  Ask what a good year means for you and for the company, or a bad one, or just an average one, and what your upside might look like.   Is there a formula for part of it?  Take notes; you may need to refer back to those later on.  (That’s also sending a message, too!) 

Now’s the time to ask all of the questions you’ve been deferring throughout the interview process. Technology? Office space? Work culture issues?  Reviews?  Severance policy (yes, even that)?  Start date?  Anything goes on the table here.   

By not negotiating, you are almost always leaving money on the table.  Remember, it’s expected.  Using these three steps should improve the outcome of most compensation discussions.  Nothing to lose, plenty to gain.  

Salary Negotiations, Performance Reviews, Self-Marketing - Is There a Gender Difference?

A Case

Nicole was a superstar marketer in media. She had it all. Social media, the quantitative/research background/great work history/product knowledge/branding, you name it. You just couldn’t be any more qualified for the position for which she was interviewing. That became obvious to me after about ten minutes of our first meeting.  

She did extremely well on the interviews for a job as Chief Marketing Officer of a major well-known organization, one of the leaders in its field. It sounded to both of us like a job that would make her career. 

And she was terrified about dealing with the impending offer. Her inclination was to accept whatever was offered, because she was convinced that the CEO would renege if she even questioned any aspect of the offer.

We went through the basics (outlined in much more detail in the chapter of In Search of the Fun-Forever Job: Career Strategies that Work that deals with salary negotiations).  

  • First, she deferred conversation about money as long as she could, thereby building her value more than she could have if she had talked about it up front.
  • Second, she did not negotiate at the point of offer, because she needed to develop a negotiating strategy based on hearing the details of the offer.
  • Third, she developed a step-by-step strategy for a collegial face-to-face negotiation with the CEO and the head of human resources. Every issue she had questions about was incorporated into her list. She pushed back mostly on bonus issues, because the word “discretionary” was used, and that’s almost always a red flag; she was seeking a clearer definition of what that meant.  She did get that clarification, which was a major part of the negotiation in her case.

She did very well in the overall process, and, frankly, was astonished that the CEO and human resources people did not even flinch when she pushed back. They, as I had predicted, had expected it. 

Almost invariably, those who extend offers do expect some pushback, some negotiation. Actually, they are surprised if the offer is accepted on the spot.  

Nicole did not need for them to be her friends; this was a business transaction where she was trying to be compensated for her significant potential value to the organization.  

By the way, she’s now in line for the CEO position. The company is obviously thrilled with her.

If she had not negotiated assertively, she would have ended up unhappy in the position when she found out she was underpaid-–and she wouldn’t have clarified the bonus issue.  There were several other issues, too, that were clarified in the final phase of the process, as the result of a well thought-out strategy.   

I can’t wait to work with her on the next negotiation.  

Is There a Gender Difference?

For many years, I’ve been thinking about the issue of women and negotiating--or, as I like to call it, “making the ask.” While it’s important to be careful about stereotyping and generalizations, this seems to be one of those issues that appears and re-appears with my women clients and students, and hasn’t seemed to change much in the 30+ years I’ve been working in career advisement.  

In general, most of the women I’ve worked with have had difficulty in salary negotiations, performance reviews, and marketing themselves assertively.

I have tried hard to figure out why. I’ve found this to be true even with fulltime female MBA students in elite business schools, a population which you would expect to be more assertive and confident than most. Think about it – 26-year-old women (who grew up in an era where women can reasonably expect to do well in nearly any profession, including those on Wall Street) who have excelled in top colleges, done very well in their first jobs, and been admitted to extremely selective graduate schools, where the competition is fierce.  

Yet, when I teach classes on salary negotiations, I find that the women in the class almost uniformly will say this subject is difficult for them. Most of the men won’t. (Of course, there are exceptions to each side.)

Why does this problem exist? I’ve been trying to figure it out for a long time. Historically, culturally, psychologically, any way one could look at it. Is it because most women tend to be more relationship oriented and, therefore, more invested in caring that others like them? Maybe.  

I’ve often noticed that my women clients are usually better at building long-term networking relationships–-but when it comes to direct self-marketing, there’s still a problem. They’re frequently more comfortable joining groups in the career transition process, too. But still, taking credit and expressing confidence about accomplishments is often difficult. So I work with them on getting past worrying about whether the other person in the transaction is going to like them, or might withdraw the offer if they push back.  

Hey, it’s business! If you’re logical and present your material in a sequential, organized, factual way, that’s what will count.  

I’m convinced it’s some kind of hard-wiring , maybe cultural, maybe biological, maybe both, but that’s not my area of expertise. (Far from it.)  

If There IS a Difference, What Are Some Coping Strategies?

What many clients have asked is-–how can they overcome these feelings of discomfort in self-marketing and/or negotiating?  

I do have a fairly simple way of at least beginning this process.  

Prepare, Practice, Perform

I think this issue is similar to the problem of anxiety about interviewing. And, as with interviewing, it doesn’t matter how you feel; it matters what you say and what you look like when you say it. In other words, performance. Acting. You don’t have to solve the anxiety problem. You have to create stronger perceptions. That requires some performance practice.  

When talking about yourself, either in an interview, or a performance review, a meeting, or a salary negotiation, instead of getting anxious about whether you’re really worth it, why not prepare for these situations by outlining what you want to say and rehearsing it (back to the acting again)? If it doesn’t come naturally, do what I tell many introverted clients to do on a search-–prepare. Outline. And then prepare again. Don’t wing it. Don’t think you have to overcome whatever that hard-wiring is all at one time. Figure out what you want to say, how to say it, and practice it.

The first major step is believing that you have significant accomplishments, that you are worth the money and/or the job and/or the promotion, and write down all the reasons. Review your resume. You probably already spent too much time on it anyway, so put it to some good use. Yes, you did that. Yes, you helped the organization achieve that. Yes, you have this skill and that skill.  

Just in case I haven’t stressed the importance of asserting yourself (and “pushing back”) in the situations mentioned, here’s one more reason for negotiating. It sets the tone for your employment, should the deal be completed. You will make it known that, for salary reviews, promotions, etc., you will be a force to be dealt with.You will not be the nice person who will roll over and watch the more assertive co-workers get the promotion or get more bonus compensation, or new responsibilities.  Management will know that you will push back to get what you’re entitled to.  
Stand in front of the mirror and watch your body language when you’re saying your planned responses. Shoulders back, smiling, great eye contact, confidence (even if you don’t feel it).  

I realize that the above is basic, that many will still want to overcome the inner anxiety, or the need to please. In the meantime, while you’re trying to solve all that, why not focus on the performance and the content?  

Vacations - imperative! Don't even ask.

I'm always astonished by clients who ask whether they should take some vacation time. Sometimes, they feel guilty about leaving work behind. Sometimes, they feel pressure--real or imagined--from management, especially in cultures that don't think vacations show commitment to the job. Other times, they’re just reflecting the overall culture (Wall Street--do you hear me?  Giant law firms--same?). In those cultures, workers brag about how many hours they work--and how little vacation time they take.

Of course, there are times when it isn't a great idea to take off. In my role as consultant at Columbia Business School, I know there are three different two-month periods during the year when it's just not possible to get away. I also understand that some bankers and attorneys, for instance, cannot walk out in the middle of a deal. 

But to not take vacation, and then brag about it, is a whole other thing.  

It's what I call "leaving money on the table." Vacation is part of compensation. Why would you not take money that is being handed to you or you negotiated for? When I teach a course in Salary Negotiations, I love to joke that on my ultimate negotiating list, number one is vacation time--and the financial stuff is further down the list. (I'm only half joking.)  

More important, it's critical that you have time, at various points in the year, to regenerate. You do need to get away from it all. I had a client, years ago, an investment banker who actually asked me if I thought it would be okay for him to check emails a few times a day while on vacation-- on his honeymoon!   

The answer is yes, there are certain jobs where you do have to check, but it needs to be kept to a minimum. Like maybe once a day for a few minutes. The purpose of the vacation is defeated if you're answering emails all day. It's tough to compartmentalize into vacation and non-vacation, while you're actually trying to BE on vacation.

All this is on my mind now as I reach the end of a long vacation. (It's been great.) Because there are some emergencies in my work, I do check email once a day, and try to answer only critical issues. But I realize when I do more than that, it wipes out the feeling of being away. A definite downside to this age of connectedness. It's getting harder to say you won't have email access in your vacation auto response, because there aren't that many places left where you can’t get any access!  

So I keep away from the computer, iPad, and mobile phone as much as possible. They sit there calling out to me, but I resist. The vacation is more important. 

photo credit: Carola Chase